You've read the news, Arch Aluminum filed for bankruptcy. What does this mean to you? Odds are, not much. If anything, it will help the average glass company who is a customer of Arch.
Huh?
Yes, if you had your ear to the ground, this had been rumored for a while. Arch's management has spent a boatload of time worrying about this, setting it up, and preparing for the future. Now that the future is here, and well defined, they can get back to the glass business and Arch's employees can be assured their jobs are continuing. Your service should improve as everyone can let their breath out and go back to business as usual. Arch was a glass fabrication company, not one of these financial super markets. The bankruptcy won't interfere with their core business. Sure, the bankruptcy is going to hurt their vendors and the owning family, but the glass and metal customers will come out ahead.
If you were an Arch customer, continue to be one. They are not going anywhere. There is a temptation to shop around, and it is always a good idea to compare vendors, but don't switch just because of the bankruptcy. What brought Arch down was the debt that drove their growth, not their operations or their production. The skills of 1900 employees are not going anywhere.
Pilkington and PPG are going to take a hit. So are Guardian and Bonnell. They will all survive this. The glass industry as a whole will not be hurt by this. The biggest losers will be the banks. They knew the risks of loaning money, and got paid for their risks. I don't feel sorry for them. That is their business, no differently than folks in our industry bidding on a job, and finding extra costs associated with the job. If you don't do a proper takeoff, and really study the job, this will happen.
Some people already have said to me that the Silverstein family is making out like a banshee. I promise you this is not the case. I know that an event like this feels like a member of the family is severely sick, and then a magic medicine helps bring back the life. The only one who will be making a ton of money on this will be the attorneys. Nobody at Arch wanted this to happen, and everyone there is working to make the company healthy again. Ten years ago, filing for bankruptcy carried a stigma, totally negative. Unfortunately, today, it is thought to be 'good business' to rid yourself of debt.
I have owned four Chevy's in the past 14 years, and I will certainly buy another one when my current car gives up the ghost. The fact that GM went through bankruptcy actually makes me feel better about buying a car, because I am sure they are now healthy enough to stand behind it. You should feel the same way about Arch.
I read an interesting note on the US Glass News page today. One of the oldest and best known companies in the glass industry also filed for bankruptcy this week...The Fletcher Terry Company, the company that controlled the market by making the best glass cutters in America. What happened here? Can we blame the recession and its impact on the construction industry? Can we blame imports? We don't know. Events like this happen in all industries.
The Silversteins are smart people, and their staff is truly capable. They will make Arch Aluminum viable for their customers. Count on it.
PS. As many of you know, I am a consultant in the glass industry. I have never had any financial relation with Arch Aluminum or any of its companies. The above opinion is strictly my own.
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9 comments:
"Pilkington and PPG are going to take a hit. So are Guardian and Bonnell. They will all survive this. The glass industry as a whole will not be hurt by this. The biggest losers will be the banks. They knew the risks of loaning money, and got paid for their risks. I don't feel sorry for them. That is their business, no differently than folks in our industry bidding on a job, and finding extra costs associated with the job. If you don't do a proper takeoff, and really study the job, this will happen."
The above quote should really help your consulting business. You are comparing missing something on a take-off with mis-management and millions of dollars of losses for companies who believed the crap from Arch's lying management. In all my years in this industry, I've never heard from more people who actually are glad to see this happen to a group that has flaunted their excesses and arrogance. You just got lumped in there with them. Your are a buffoon for supporting this and writing what you wrote above.
Really? -- "What brought Arch down was the debt that drove their growth, not their operations or their production." -- Really?!?!
Maybe if their operations were more profitable they would have actually been able to repay the debt which they incurred. Furthermore, when acquiring such debt, shouldn't the Silversteins of the world look at the burden it places on the company and have a sound financial plan so that in a worst case scenario (such as this) they would still be able to meet their obligations?
Seriously, if Arch's operations had been better they would have met their obligations...plain and simple, right? I guess not for you Paul.
In addition, your allusion to this being like a sick family memeber receiving magic medicine is accurrate. Mr. Silverstein got his magic medecing via bankruptcy and as a result should be elated his company (family member) will be better for it. Therefore, how do you conclude that the Silversteins are not "making out like a banshee".
Mr. Beiber, there are too many contradictions within this blog and as a result leads one to beleive that you have a greater interest (financially or emotionally) in a company that ran itself into the ground. I ask why are you so supportive of a company that has been mismanaged to the point of bankruptcy? Regardless of the outcome in Court, bankruptcy is the defining moment of mismanagement, how can you not see that?
Anyone who has been in the glass industry very long has had someone go into chapter 11 owing them money. That money is what sustains their operations, pays their employees, develops new products, and allows for growth. Selling this move as "good business" while consoling Arch's creditors with the knowledge that they "will all survive" is sad commentary on the state of business in our country. I hope that I am not the only person that mourns the loss of the stigma associated with bankruptcy.
Are you kidding me? The banks are the only ones who will lose? They knew the risks, yes, but so does anyone who loans money big or small. We have a family business who allows people to buy on "credit" and when these people can not longer pay we are the ones who get socked for it. We don't go out asking banks for loans we cannot pay! Do not make Arch look like the good guys here when clearly they did not act in a responsible manner. I guess it is ok for "Joe Consumer" to go out and buy a flat screen tv, a huge house and then go bankrupt when the economy turns bad? Our family has actually lived frugally and saved enough to make it through the tough times, but we are not rewarded? It makes one hope for an after-life where those who do not "steal" are in fact rewarded because this whole system does not reward people like us!
Hi Paul,
if the intent of your blog was to get people sharing opinions, you were very succsessful, a little lop sided but succsessful.
A couple of observations...... People seem to missread or misinterperate the written word....not just in your blog, many others too.
Anonymous should not be an option (my opinion). It is good to disagree, healthy in fact and I thank all who put their name to their views.
Love them or hate them, Arch is hurting, also their employees, vendors, customers et al. No one wins. It is very unsettling to me, as we hopefully hit bottom, to read any negative news about anyone involved in our industry. I trust we are getting to the end and the light at the end of the tunnel is not an oncoming train.
keep thinking positive
Jim F
I agree with your blog however, Arch has been way too liberal with their customers and their account receivables. They MUST cut off customers when they are over their credit limit and fail to pay, regardless of what their prior buying and loyalty. Especially in an economy like this. All of us, manufacturers, contractors, suppliers, etc. need to cut off those who do not pay in a reasonable time frame and quit shipping to them or pull our men off the job until we see enough of a payment to bring their balance to near current. A little here and there doesn't cut it.... usually the next order amount or invoice amount will again put them further in the red. Good luck to Arch in overcoming this bankruptcy for the sake of us all.
I am interested in seeing how they will get materials while they are still settling with unsecured creditors. I am also curious to see the Grey Mountain strategy and where they will take Arch.
Your statement that the attorneys are the only winners is quite true. However, being able to shed close to $200M in debt and keep operating isn't all bad either.
I don't envy the pain that management team had to go through, especially the final month purchasing from vendors that you know you won't pay. That would be very difficult for me.
We'll see how it shakes out.
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